The superannuation guarantee amnesty is about to end
Act now to benefit from the super guarantee amnesty
Businesses wanting to take advantage of the super guarantee amnesty have less than a month to disclose underpayments of super guarantee to the ATO and work out a payment plan. Don’t worry if your business doesn’t have the funds at the moment to pay the shortfall, the ATO is willing to work with you to create payment plans to make good on unpaid super over time.
According to the government, businesses that do not come forward before 7 September 2020 and are subsequently audited and found to have underpaid employees superannuation will face significant penalties.
If you run a business which may have a super guarantee shortfall, inadvertent or otherwise, be quick as time is running out to take advantage of the one-off government amnesty. The legislation to enact the amnesty was passed by Parliament earlier this year and businesses could be forgiven if they missed the announcement which happened around the same time as COVID-19 started to take hold around the world.
What is the super guarantee amnesty?
To recap, the super guarantee amnesty allows employers to come forward to declare any super guarantee (SG) shortfalls and self-correct SG underpayments with reduced penalties. The employer can also claim a tax deduction for payments of SG charge or contributions made during the amnesty period. The amnesty applies to historic shortfalls as far back as 1 July 1992 up until the quarter starting on 1 January 2018 (inclusive).
When does the super guarantee amnesty end?
Time is running out however, as the amnesty is due to end on 7 September 2020 which is less than a month away. To take advantage of the amnesty, businesses must come forward and disclose to the ATO before 7 September 2020 and either pay the unpaid amounts of super in full with interest or put a payment plan in place to do so in the future. Any payments made by 7 September 2020 will be tax deductible.
The ATO understands and acknowledges that the current economic situation caused by the pandemic may mean that some businesses are unable to pay their super guarantee debt in full by the legislated deadline. Accordingly, the ATO is encouraging employers to still apply for the amnesty as it has put in place pathways to work with businesses and create payment plans to make good on unpaid super over time.
“Super is a form of deferred wages and every bit as important to be paid, and paid in full. The super guarantee amnesty allows employers a one-off opportunity to come forward, pay or put a plan in place to pay, and set things right without facing financial penalties from the tax office.” – Senator Jane Hume, Assistant Minister for Superannuation, Financial Services and Financial Technology.
ATO remission of penalties
The ATO has already released a draft law administration practice statement (PS LA 2020/D1) which outlines the ATO’s potential approach to penalties after the conclusion of the amnesty. The draft Practice Statement notes that if an employer does not come forward and take advantage of the amnesty before 7 September 2020, they will face significantly higher penalties when they are caught by the ATO – a minimum 100% penalty on top of the SG shortfall.
In addition, the draft Practice Statement indicates that payments of SGC made after 7 September 2020 will not be tax deductible, even if they relate to SG shortfalls disclosed under the amnesty. Employers will also be liable for Part 7 penalty (up to 200% of the SGC) for failing to provide a SG statement by the time they were required to do so.
The ATO says it will take a very strict approach to penalties where an employer could have come forward voluntarily to disclose a SG shortfall and failed to do so. The ATO generally expects that remission of the Part 7 penalty will not exceed 50% (i.e. 100% of the SGC) where an employer did not come forward voluntarily and it took ATO compliance action for them to disclose, even for quarters where there is no legislated restriction on remission.
Need to take advantage of the amnesty?
If you think your business may have underpaid super guarantee for your employees, we can help you take advantage of the amnesty and avoid penalties. Remember, if you don’t have the funds to pay the shortfall immediately, we can help you work out a payment plan with the ATO. Contact us before it’s too late.
Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.